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Nicaragua pushes ahead with eco-friendly overhaul of electricity sector.

Nicaragua continues to draw accolades for its ongoing "energy revolution," which has not only boosted the country's total electricity output but also involves a fundamental shift in how that power is derived.

Hobbled by intermittent blackouts and burdensome fuel bills, Nicaragua passed legislation in 2005 designed to diversify its heavily oil-dependent electricity sector by encouraging investment in projects involving renewable energy sources. At that time, renewables accounted for only one-fifth of the country's electricity. The other 80% came from generators operated with imported bunker oil, a pricey petroleum derivative.

Nine years later, clean-energy facilities produce more than half of Nicaragua's power. At moments, depending on how the various plants are operating and how much power the country consumes, the numbers are better still. For the weekend of Nov. 8-9, the Centro Nacional de Despacho de Carga (CNDC), Nicaragua's national power regulator, reported that a record 82% of the power consumed came from renewable sources, namely hydroelectric dams (27.5%), geothermic plants powered by subterranean volcanic vents (23.2%), and wind parks (31%). The high-water mark was made possible by favorable weather conditions that boosted hydroelectric output and kicked the country's wind farms into gear.

The CNDC percentages are somewhat misleading in that they reflect a precise moment, as opposed to an annual average, and are a measurement of production, which is variable, rather than generating capacity, which is how the proportion of clean energy in a given country's electricity grid is often measured. Capacity-wise, Nicaragua's matrix is approximately 44% renewable-based (as of 2013), up from 36.3% in 2008, the UN's Economic Commission for Latin America and the Caribbean (ECLAC) reported earlier this year.

This month's record numbers are a testament, nevertheless, to the phenomenal about-face the Nicaraguan energy sector has experienced in recent years, particularly since President Daniel Ortega returned to power in early 2007. The Ortega government has set aggressive green-energy goals and benefited, in turn, by a surge in investment, much of it from private enterprises (NotiEn, January 2011, and NotiCen, April 19, 2012). Overall, some US$1.6 billion was poured into the sector between 2006 and 2013, the Inter-American Development Bank (IDB) and Bloomberg, a US financial media company, noted in their 2014 Climatescope report, the latest in an annual series that ranks emerging markets based on their clean-energy investment climate.

The result has been a steady increase in the role of renewables, which accounted for 27% of electricity production in 2007, 29% in 2009, 32% in 2011, and 51% in 2013, according to the Ministerio de Enegia y Minas (MEM). The ministry expects this year's average to reach 54%. "Other countries evolved gradually," Lizeth Zuniga, executive director of the nonprofit group Asociacion Renovables de Nicaragua, explained in a recent interview with McClatchy Newspapers. "Nicaragua just leaped ahead."

"Paradise of renewable energies"

Much of the recent investment has gone into wind farms, several of which have popped up along the western shore of Lago Cocibolca, also known as Lake Nicaragua. The first such facilities, Amayo I and Amayo II, began operating in 2009 and 2010, respectively. They have a combined installed capacity of 63 megawatts and together are considered to be Central America's largest wind park. The total installed capacity of Nicaragua's electricity grid is nearly 1,300 MW, according to ECLAC.

Two more wind farms, each with an installed capacity of approximately 40 MW, began operating in 2012. Another 40 MW facility, developed by ALBA Vientos, opened earlier this year. ALBA Vientos is a subsidiary of the government-controlled ALBA de Nicaragua S.A. (ALBANISA), a company set up to manage funds invested via the Alianza Bolivariana para los Pueblos de Nuestra America (ALBA), a Venezuelan-led trade bloc in which Nicaragua is an active member.

The ALBA Vientos wind farm, which bears the name Camilo Ortega Saavedra in honor of a brother President Ortega lost shortly before the 1979 Sandinista revolution, drew a visit in late July from UN Secretary-General Ban Ki-moon. The UN head described the facility as "very impressive" and noted just how "lucky" Nicaragua was to have such a "vast potential of renewable energy resources-solar, wind, you have very strong, constant wind, and geothermal and hydro."

A month earlier, Nicaragua received a visit from IDB president Luis Alberto Moreno, who praised the country for its "unprecedented energy transformation." The Washington, DC-based IDB published an article the year before hailing Nicaragua as a "paradise of renewable energies." The article estimated the country's total clean-energy potential to be 5,800 MW, nearly five times the Nicaraguan grid's current installed capacity. So far, producers are only exploiting 5% of those resources, which, in addition to "excellent exposure to the wind and sun," also includes geothermic energy "resulting from [Nicaragua's] large volcanic chain and seismic activity," the IDB article explained.

Investment numbers down

Nicaragua's green-energy potential is so great, say analysts, that it could soon become a major electricity exporter, especially now that its grid has been linked to those of its Central American neighbors via the mostly completed Sistema de Interconexion Electrica de los Paises de America Central (SIEPAC), a US$320 million network of transmission lines stretching from Guatemala to Panama. MEM reported earlier this year that Nicaragua has already begun exporting modest amounts of electricity (approximately US$5 million worth between January and April) to Panama, Costa Rica, and Honduras.

The one black mark on Nicaragua's otherwise gleaming energy record was a significant decline in 2013 in clean-electricity investment, which fell to US $129 million after reaching a record US$290 million in 2012, according to this year's Climatescope report.

The IDB/Bloomberg study cited the drop as part of the reason Nicaragua dropped from fourth to seventh place (among Latin America and Caribbean nations) on this year's investment-climate ranking. Nicaragua also lost points because of changes in the methodology used. For the 2014 version, researchers "increased the importance of clean energy value chains in the overall score," the report explains. The inaugural Climatescope study, in 2012, ranked Nicaragua second in the region behind Brazil (NotiCen, April 19, 2012).

The Climatescope ranking aside, authorities in Nicaragua are convinced that the sector's outlook --both in future investments and in the renewable-energy goals--is extremely bright. In September, Energy and Mining Minister Emilio Rappaccioli predicted that, during the next 15 years, investors would pump US$4 billion into clean-energy projects that together would add nearly 800 MW of power and thus boost the country's total generating capacity by approximately 60%. The bulk of that new power will come from wind farms (300 MW) and a large hydroelectric project known as Tumarin (253 MW). Plans are in the works for solar (100 MW) and geothermal (100 MW) plants as well.

Rappaccioli also took the opportunity to spell out the Ortega government's latest green-energy targets: 90% by 2020, and 97% by 2028. The more immediate of the two goals will depend in large part on whether developers can complete the long delayed Tumarm project by 2019, as planned. The US$1.1 billion dam, a Brazilian venture slated for the Rio Grande de Matagalpa in the Region Autonoma del Atlantico Sur (RAAS), was green-lighted in 2010. Developers promised at the time to have it up and running by 2014 (NotiCen, March 18, 2010).
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Author:Witte-Lebhar, Benjamin
Publication:NotiCen: Central American & Caribbean Affairs
Date:Nov 20, 2014
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